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Aspects of contract and negligence for business assignment 1

Nguyễn Thị Kiều Anh - Snow - F05014


VN: Nguyễn Thị Kiều Anh
EN: Snow
Aspects of Contract and Negligence for Business
1 of 2 (individual report)
Mr. John Andre
5 Nov 2013

I, _____Nguyen Thi Kieu Anh_____ hereby confirm that this assignment is my own work and not
copied or plagiarized from any source. I have referenced the sources from which information is
obtained by me for this assignment.


__________5 Nov 2013_________



---------------------------------------------------------------------------------------------------------------FOR OFFICIAL USE (Course Administrator)
Assignment Received By:


Nguyễn Thị Kiều Anh - Snow - F05014
Unit Outcomes

Evidence for the


Assessor’s decision

the essential
elements of
a valid
in a

explain the
importance of the
essential elements
required for the
formation of a valid


discuss the impact
of different types of


analyse terms in
contracts with
reference to their
meaning and effect


apply the elements
of contract in given


apply the law on
terms in different


evaluate the effect
of different terms in
given contracts



Be able to
apply the
elements of
a contract in

Merit grades awarded




Distinction grades awarded




( ) Well-structured; Reference is done properly / should be done (if any)



Nguyễn Thị Kiều Anh - Snow - F05014


Evidence for the


Assessor’s decision


Overall, you’ve

Areas for improvement:









(Oral feedback was also provided)
NAME :..............................................................................
: ...........................................................................
VERIFIED BY : ...........................................................................
: ...........................................................................




Nguyễn Thị Kiều Anh - Snow - F05014

Prepared for:
Lecturer, Mr. John Andre
Aspects of Contract and Negligence for Business

Banking Academy, Hanoi
BTEC HND in Business (Finance)

Prepared by:
Nguyễn Thị Kiều Anh - Snow - F05A
Registration No: F05-014
No of words: 3000
Submission date: 5 November, 2013



Nguyễn Thị Kiều Anh - Snow - F05014

In this report, I play role as a business consulting firm for Ken Kummings, owner of a small
chain of restaurants called Ken Can Cook (KCC). My responsibility is search for a better
understanding on how the law affects his business and gives suggestions on situations related
to law contract. I write this report based on information in the Business Law course book and
some reference books, many sources from internet, newspaper. In addition, many slides which
were continuously updated every week by lecturer John also help me collect information,
theory, and case study in order to support applying for situations of Ken Can Cook Company.


Nguyễn Thị Kiều Anh - Snow - F05014
A valid contract is a contract that complies with all the essentials of a contract and is binding
and enforceable on all parties (Anon, 2013). Therefore, in order to form a contract to be valid
and enforceable, a contract must contain elements including agreement, consideration,
intention to create legal relations and capacity.
1. Agreement
An offer is a define promise to be bound on specific terms. Acceptance is the unqualified
agreement to the terms of the offer. If one of two components of agreement is missing,
there is no agreement (BPP, 2010).
A contract is formed when one party makes an offer and another party accepts it. It is a
legally binding the parties and each party must have responsibility to perform the
agreement in the contract. When an offer is given, meaning that the offeror is willing to be
bound in specific term if the offer is accepted. An offer must be clear, specific, avoid
ambiguity to ensure that others (other party, judge) see same as you (John, 2013). An
offeror may revoke offer any time before it has been accepted, but the revocation of offer
must be communicated to the offeree. If an offer have revocation by the offeror, rejection,
and lapse of time, it will not be accepted and is terminated (Anon, 2013).
 Offer and acceptance play an important role in evaluating the legally bound between the
parties and form contract (no agreement, no contract).
Carlill v Carbolic Smoke Ball Co [1893]
The advertisment (reward £100 to any person stills influenza after using the smoke ball
according to printed direction) of the Carbolic company to the public was also an offer (an
offer can be made to the whole world) and the purchasing and using ‘smoke ball’ of Carlill
was acceptance. The offer was not vague because he smoke ball must protect the user
during the period of use. Therefore, contract is formed.
KCC v Delicious Tables
The court would decide that the advertisement on the radio also was an offer with specific
term (Delicious Tables will provide extra guarantee if goods was chipped or scratched in
the first year of service). Based on this advertisement, Ken accepted this offer (purchased
goods from Delicious Tables). Contract was formed immediately when Ken bought it.


Nguyễn Thị Kiều Anh - Snow - F05014
Therefore, if Delicious Tables breached this contract, Delicious Tables have to replace
scratched tables for KCC, or compensate reasonable money for breach of the contract.
2. Consideration
Consideration is exchange between two parties, in which, one party give something of
value (such as money, good or services, promise to do something in the future) to get
benefits, another something of value from other party. Consideration may be executed (an
act in return for a promise) or executory (a promise in return for a promise).
Consideration is valid when:

Something legal (not promise to break the law, do illegal acts)
Something possible (only promise what you can do, under your control)
Something sufficient but necessarily adequate (adequate and fair - equal in

value are not issue, just must be reasonable) (BPP, 2010).
 Most of contracts require consideration (No consideration, no contract)
Hartley v Ponsonby [1857]
The large number of desertions made the voyage more hazardous, and this had the effect of
discharging the original contract. The claimant had a new contract, under which his
promise to complete the voyage formed consideration for the promise to pay an additional
£40 (Refer to appendix)
In the case of Edie v Ken v Gary, there was an exchange between Ken and Edie, each
party got something of value and both of parties have benefit (Ken would get a dish
washing machine from Edie, and Edie would gain a cash register from Ken), which formed
consideration between them. Similarly, Ken got £300 from Gary and Gary received
washing machine from Ken, each party got something of value and benefit from others,
which formed consideration between Ken and Gary.
3. Intention to create legal relations
It can be defined as “the parties to the agreement intended to be legally bound by the
agreement”. Intention to create legal relations consists of 2 kinds: domestic agreements and
commercial agreements (BPP, 2010).

Domestic agreements included agreement between spouses, relatives, friends and
other social relations. Spouses who are living together, were close and happy, and trust
each other are not intend to be legally binding but if they are divorced, an agreement is
presumed as intends to be enforceable (John, 2013).
Balfour v Balfour [1919]

Nguyễn Thị Kiều Anh - Snow - F05014
The agreement was made when spouses was still happy and trust each other (domestic
agreement) so the parties didn’t intend to create legal relations, even though there may
have been consideration (Refer to appendix)

Commercial agreement is presumed as intends to be legally bound. It is not valid
contract if it is ambiguity, mere ‘puffs’, honor clauses, and sentence ‘subject to
KCC v Delicious Tables
This agreement between KCC and Delicious Tables was a legally binding the parties
because parties have intention to enter into legal relations. When offer (advertisement
on radio) was given, meaning that Delicious Tables was willing to be bound in term if
the offer is accepted. As a result, after offer was accepted by KCC, the contract could
not change so each party must have responsibility to perform it. Thus, Delicious Tables
have to replace scratched tables for KCC as given in term of advertisement.

4. Capacity
Capacity refers to some groups such as minor, drunkenness, duress, mentally ill as being
unable to enter into binding contractual arrangements because they are not in position to
fully understand the agreement which have entered into. The contract is made by
drunkenness is still enforceable if the offeror ratify the offer while sober and do not revoke
the offer until after acceptance. The contract is formed by minor is valid if contracts are
ratified after majority (18th birthday), contracts for the supply of goods and services which
are necessaries, bring benefits for them and if it is guaranteed by parents… (John, 2013).
Nash v Inman [1908]
The cloth could be appropriate to the station in life of the undergraduate, but the contract
was not enforceable because the minor was already adequately supplied with clothes.
Therefore, clothes supplied by the tailor could not be classified as necessaries. As a result,
Inman must pay £122 for Nash (Refer to appendix)
KCC v Bob
Based on Sec.3, Sale of Goods Act 1979, although Bob is minor (under 18 years old), the
contract was still enforceable because this contract for supplying food which is essential
products (contract for necessaries) and bring benefit for minor. Therefore, Bob must pay a
reasonable price for them, not need to pay full amount (£200) due to late delivery.


Nguyễn Thị Kiều Anh - Snow - F05014
1. Verbal contracts
Verbal contract is a business contract based on spoken promises rather than a written
document. It is as legally binding as a written contract. In order to be valid, a verbal
contract must contain three factors: offer, acceptance, and consideration. Some contracts
must be in writing such as buying, selling real estate, transfer of shares, consumer credit…
Verbal contracts can lead to difference in understanding or memorialize contract’s content
of each party  If any problem arise, terms of a verbal contract may be hard to prove, and
there are no witnesses to the agreement (Sherman, n.d.).
Noel Edmonds v Ulrik Lawson [2011]
In this case, neither of the arrangements between the parties were formalized in writing,
and the parties relied on oral agreements. Because Edmonds did not remember the
conversation clearly so it leads to disputation (Refer to appendix)
In the case of Ken v Fast Money Bank, there was offer (Ken’s promise is taken by talking
terms), acceptance (actions of loan officers of Fast Money Banks: gave Ken the ₤10,000
and the two shook hands), and consideration (have exchange value, and bring benefits for
each parties - Ken receive money for operating company, Fast Money Bank get interest
from lending) so verbal contract is valid. However, according to Consumer Credit Act
1974, any contract involving credit must be in writing so consumer credit must be in
writing, not verbal contract. As a result, this verbal contract was unenforceable and Ken
can stop paying.
2. Written contracts
A written contract is an agreement made on a printed document outlining an agreement
that has been signed by both parties. When signing into a contract, it is assumed that
parties have read and agreed to all of terms in the contract (Irby, n.d.). Written contract
concludes everything that is necessary for a contract: standard, common and easy to
understand. It is different from verbal contract; it is evidenced and difficult to dispute. The
contract is invalid if it is no consideration and bound parties to do illegal thing, even have
signatures (John, 2013).
Pym v Campbell [1856]
Campbell entered into a written agreement with Pym to buy three eighth's of the benefits
of Pym's invention for £800 'which if Abernethie approved the invention. Although the


Nguyễn Thị Kiều Anh - Snow - F05014
written contract signed by both signed, Abernethie did not approve the invention. Thus,
there was no contract (Refer to appendix)
Ken v Charlie
This was written contract because there were fully elements such as name, date making
contract clearly, signatures of both parties, consideration (KCC restaurant can be
considered as Ok for doing business, Charlie can get £500). However, this written contract
was invalid because it bound parties to do illegal thing (receiving bribe to hide KCC are
not clean enough) so Ken cannot reclaim Charlie.
3. Implied contracts
An implied contract is a contract that has not been written up or signed but was understood
to be an agreement. It is an agreement that will uphold in court through the actions of
those involved (Spellbinder, n.d.). This contract is ‘not written, not verbal between the
two parties’. Unilateral contracts (does not bind offeree, only offeror). Dr. Visit, Lawyer
visit is considered as implied contracts (John, 2013).
Carlill v Carbolic Smoke Ball Co [1893]
In this case, it was considered as an implied contract with unilateral contract (the
advertisment of the Carbolic company to the public was also an offer and implied that the
defendants were bound by their offer)
In the case of Ken v Albert, there was an implied contract between them because
restaurants did not serve foods and services for free and going to KCC restaurant and
ordering some foods was actions which indicated that Albert accepted the contract.
Therefore, Albert has to pay £150 for Ken.
1. Innominate terms
Innominate terms are known as ‘intermediate terms’ which will be can classify in
condition or warranty terms depending on the impact of the breach. If the effects of the
breach are serious, the term will act as a condition; if they are minor, it acts as a warranty
(Elliot & Quinn, 2009)
Hong Kong Fir Shipping Co Ltd v Kawasaki Ltd [1962]
The term ‘seaworthy’ was innominate, the effects of the breach also were not serious
because the ship was still available for 17 out of 24 months. Therefore, the defendant
cannot breach the contract (Refer to appendix)


Nguyễn Thị Kiều Anh - Snow - F05014
In the case of Ken v Jelly Bean Rentals, the term ‘the stove worked correctly during the
length of the lease’ was innominate. In this case, the court would consider that the timer on
the stove just a small part of stove, when it stopped working, it didn’t affect seriously on
operating of stove due to other parts are still working normally. Therefore, this term is
considered as warranty term and Ken cannot cancel the contract. However, Jelly Bean
Rentals must compensate for late repairing services which effects small part on KCC’s
performance. Due to the fact that contract cannot be revoked; Ken must pay double to
£400 per month for failing to make 2 or more payments on time which is stated in the
2. Implied terms
Implied terms are terms which are not stated but are part of the contract for various
reasons (John, 2013).
These implied terms are divided into different groups

Terms implied by custom: Terms can be implied into a contract if there is evidence
that under local custom they would normally be there.

Terms implied by statute: Terms may be implied by statute. It permits the parties to
contract out of the statutory terms or the statutory are obligatory: the protection given
by the Sale of Goods Act 1979.
Sale of Goods Act 1979 has some key provision:

Section 12: Implied term about title: The seller must have the right to sell the
goods (protects purchases where the seller does not have right to sell the goods).

Section 13: Implied term that the goods will correspond with the description.

Terms implied by the courts: Terms may be implied if the court concludes that the
parties intended those terms to apply to the contract, including term by fact and by
law (BPP, 2010).

Liverpool City Council v Irwin [1976]
The court did implied a term, which arose as a legal incident in contracts of a defined type
between landlord and tenant that the landlord was to take reasonable care to maintain the
common parts. However, there was no breach of this duty (Refer to appendix).
Edie v Ken v Gary
The court would decide contract between Ken and Gary as implied term about title
(Implied term by statute). Although it was not written in the contract, it implied that if Ken
do not own washing machine, he has the right to sell it for Gary based on Section 12 of

Nguyễn Thị Kiều Anh - Snow - F05014
Sale of Good Act 1979. In fact, written contract between Edie and Ken was invalid (Ken
actually knew that cash register never worked but still sold it for Edie, Ken violated the
contract by capitalizing on Edie’s mistake - no check before taking) so Ken didn’t have
title for washing machine which bought for Gary. As a result, the contract between Ken
and Gary was unenforceable. As a result, Ken has to pay £300 back for Gary and Gary
has to pay washing machine back for Edie.
KCC v KCC’s customer
The court would decide this case as implied a term because although condiments were not
included the contract but it was considered as basic term (everyone usually eat hotdogs
come with condiments). Therefore, KCC still take reasonable responsibility for
providing condiments for customers or reduce hotdogs fee for lacking of condiments.
3. Exclusion clause
Exclusion clause is a clause which seeks to exclude all liability for certain breaches. It is
formed in written contract, ticket or notice. The exclusion clause may be incorporated into
the contract if:

A document is signed at the same time of making the contract, its contents become
terms of that contract, regardless of whether they have been read or understood,
except from misrepresentation.


Notice is given before or at the time of contracting and notice is reasonable (No
reasonable where an exclusion clause is not on the front, and there are no words on
the front referring to it) (Elliot & Quinn, 2009).


Follow contract law: Unfair Contract Terms Act 1977 and Unfair Terms in Consumer
Contracts Regulations 1999.

UCTA 1977 has some following main provisions:

You can’t exclude liability for personal injury or death which results from your


Exemption clauses have to be reasonable, unless that term will be void.


You can’t exclude liability for defective goods supplied to a consumer (Riley, 2012)

Thorton v Shoe Lan Parking Ltd [1971]
The machine itself constituted the offer. The acceptance was by putting the money into the
machine. The ticket was dispensed after the acceptance took place and therefore the clause
was not incorporated into the contract. As well, exclusion clauses for personal injury are
invalid (Refer to appendix).

Nguyễn Thị Kiều Anh - Snow - F05014
In the case of Henry & Ivan v Ken, the receipt with the ticket was delivered after the
contract took place (implied contract was formed through actions when Henry and Ivan
entered to KCC and order their lunch) and also notice was unreasonable due to the fact
that notice was not on the front of receipt, and there were no words on the front referring
to it to draw attention to this note for customers. As a result, it was not part of the contract.
Moreover, according to section 2 (Avoidance of liability for negligence) of UCTA 1977,
exclusion clauses for personal injury resulting from negligence (employees were too busy
to notice spilled drink lead to slipping of Henry and Ivan) were invalid. Therefore, KCC
have to pay all £2,000 for Henry and Ivan.


Nguyễn Thị Kiều Anh - Snow - F05014
Understanding the law of contract plays an important role in running the business. Only
when the company knows exactly what is legal or illegal, they can avoid regretted
mistakes in making the contract which make them lost profits, even lead to bankruptcy.
This report provide reader many useful information from analyzing real case and applying
it in scenario follow UK law but it cannot avoid limitations due to difficulties in
expressing exactly and logically term of law, and with maximum 3000 words, the report
cannot explain and analysis situations in details. Hopefully, it can be improved in the next


Nguyễn Thị Kiều Anh - Snow - F05014
1. Real case

Carlill v Carbolic Smoke Ball Co [1893]
The facts: The defendant, a medicine manufacturer, publishing an advertisments: a

reward £100 to any person stills influenza after using the smoke ball according to
printed direction. Moreover, £1,000 had been deposited at a bank to show company’s
sincerity in this matter. The claimant purchased and used the smoke ball as directed but

still flu. She claimed for £100.
Hartley v Ponsonby [1857]
The facts: 17 men out of a crew of 36 deserted. The remainders were promised an extra
£40 each to work the ship to Bombay. The claimant, one of the remaining crew-

members, sued to recover this amount.
Intention to create legal relation
Balfour v Balfour [1919]
The facts: Husband (defendant) promised to pay his wife £30 per month whilst she
remained in England for medical reasons (Mr B had to return to Ceylon). The couple
later separated. Mrs B claimed £30 per month pursuant to Mr B’s promise.

Nash v Inman [1908]
The facts: Nash, a tailor on Savile Row, entered into a contract to supply Inman (a
Cambridge undergraduate student) with, amongst other things, 11 fancy waistcoats.
Inman was a minor who was already adequately supplied with clothes by his father.
When Nash claimed the cost of these clothes Inman sought to rely on lack of capacity
and succeeded at first instance.


Verbal contract
Noel Edmonds v Ulrik Lawson [2011]
The facts: This dispute was between a television presenter and property investor, Noel
Edmonds, and two property developers with whom he had become good friends, Ulrik
and Judy Lawson. The dispute arose regarding two properties, the first of which was
Wood House in Devon, purchased through a joint venture between the parties with the
aim of commercial gain (the Wood House Joint Venture). The second was St Serf in
Exeter, which Mr Edmonds purchased as a family home, and the Lawsons agreed to

Nguyễn Thị Kiều Anh - Snow - F05014
renovate (the St Serf Renovation). Neither of the arrangements between the parties
were formalized in writing, and the parties relied on oral agreements. Following the
breakdown of the relationship between the parties, the court was required to consider
two cross claims, and therefore interpret the terms of the oral agreements that had been
Decision: The Court did not accept that the Lawsons agreed to do the work for no
service fee, but accepted that the precise method of charging was never thoroughly
discussed or explained. The Court was required to carry out a quantum meruit valuation
of the renovation work undertaken, which entailed an analysis of the facts along with
expert evidence from two quantity surveyors to work out the value of the work that had
been carried out. In doing so, it rejected that the work had been carried out for no fee
and without a markup on ‘all other costs, labour and materials etc’, and calculated a
percentage for the services provided by the Lawsons, along with a 15% markup that
expert evidence determined appropriate in the circumstances. Although sums were
deducted for the failure of the Lawsons to advise on planning, building regulations and
VAT, the Court awarded the Lawsons £683,512 (less sums already paid) for the
renovations carried out.

Written contract
Pym v Campbell [1856]
The facts: Campbell entered into a written agreement with Pym to buy three eighth's
of the benefits of Pym's invention for £800 'which if Abernethie [an engineer]
approved the invention, should be the agreement, but, if Abernethie did not approve,
should not be one.'
Decision: The written agreement was, on the face of it, a clear contract signed by
both parties. Abernethie did not approve the invention. Campbell claimed that,
despite the existence of a written agreement signed by both parties, there was no

Implied contract
Carlill v Carbolic Smoke Ball Co [1893]


Nguyễn Thị Kiều Anh - Snow - F05014
The facts: The defendant, a medicine manufacturer, publishing an advertisments: a
reward £100 to any person stills influenza after using the smoke ball according to
printed direction. Moreover, £1,000 had been deposited at a bank to show company’s
sincerity in this matter. The claimant purchased and used the smoke ball as directed but
still flu. She claimed for £100.
Decision: In this case, it existed unilaterial contract which is formed not in written, not
verbal between two parties, only through an advertisment. Therefore, an implied
contract is made. The court considered these two defences as follows:

The smoke ball must protect the user during the period of use. The offer was not


The advertisment of the Carbolic company to the public was also an offer and the
purchasing and using ‘smoke ball’ of Carlill was acceptance so implied contract is


Innominate terms
Hong Kong Fir Shipping Co Ltd v Kawasaki Ltd [1962]
The facts: The claimant agreed to rent their ship to Kawasaki for 24 months and stated
on the contract that the ship would be seaworthy along with period of hire. However,
due to inefficient engine room staff and old engines, the ship was held up for 5 weeks
and needed 15 more weeks to repair. The defendant considered that the claimant
breached condition and they ended the contract.

Implied term
Liverpool City Council v Irwin [1976]
The facts: The tenant sues the landlords for breach of an obligation to repair. However,
the tenancy agreement did not mention any obligations of the landlord.
Exclusion clause
Thorton v Shoe Lan Parking Ltd [1971]
The facts: Entering the car park after putting money into a machine, the claimant was
given a ticket stated that contract of parking was subject to terms and conditions which
were displayed on the inside of the car park. One of terms excluded liability for

personal injuries arising through negligence.
2. Case scenario
Case 1: Ken - owner of KCC v Albert - customer of KCC
A customer named Albert who came into the restaurant and ordered some food for himself.
The food was prepared as ordered and after Albert finished the meal he started to leave
without paying. When Ken confronted Albert, Albert said there was no contract and Ken

Nguyễn Thị Kiều Anh - Snow - F05014
should try to sue him but he will lose because there was nothing signed. The cost of the
food was ₤150.
Case 2: KCC v Bob
Bob - customer of KCC who offer online to order food for delivery within 30 minutes. The
food was delivered late about 5 minutes. Bob said that he was under 18 so he did not have
to pay. The food was returned and no longer to be sold and had to be thrown away. The
cost of food was £200.
Case 3: Ken - owner of KCC v Charlie - local health inspector
Charlie is the local health inspector and has hinted that he does not think KCC is clean
enough. Charlie told Ken that for ₤500 he could make sure that all KCC restaurants in the
city would be OK for doing business. Ken didn’t want to take any chances so he wrote a
simple contract as follows:
The undersigned agrees that all Ken Can Cook (KCC) restaurants in the city of Stratford
Upon Avon will be given clearance by the health inspector Charlie in consideration for
₤500. If Charlie does not clear all KCC restaurants, Charlie will return all of the ₤500 to
Signed by Ken:

Signed by Charlie:



Case 4: Ken Can Cook (KCC) v Delicious Tables
Ken purchased 10 new tables and 40 new chairs after hearing advertisement on radio. The
supplier, Delicious Tables said that all tables bought that month would include an extra
guarantee saying that they would replace any table, without charge, if the table was
chipped or scratched in the first year of service. Three of the tables were chipped and Ken
want them replaced as the radio ad said. Delicious Tables said there was nothing in the
contract so they did not have to replace anything. Ken feels unfair since the ad was what
motivated him to buy the table that month. The cost of the three tables is £150.
Case 5: Edie v Ken v Gary
Ken decided to buy a used dish washing machine from Edie. The written agreement said
that Ken would give to Edie a cash registry in good working order and Edie would give to
Ken a dish washing machine in good working order. On Monday, Edie and Ken exchanged
items. On Wednesday, Ken sold it to Gary for £300 before using it and on Friday Edie find
out that Ken’s cash register never worked. Edie wants to get the dish washer back from
Gary, says he made a good faith trade with Ken and he will not give the machine back.
Gary says that Edie must deal with Ken.

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Case 6: Ken v Fast Money Bank
Ken met a loan officer of Fast Money Bank due to need a working capital loan and agreed
by talking (with nothing in writing) with the following terms: Fast Money would lend
KCC ₤10,000 at 10% interest per year for two years. KCC would make equal monthly
instalments of ₤461.45 for 24 months for a total of ₤11,074.78. If KCC failed to make any
payment on time, Fast Money would have the right to take and sell any asset from KCC in
order to get the money owed by KCC to Fast Money. The loan officer gave Ken the
₤10,000 and the two shook hands. Ken has already made two payments but feels he cannot
make any more payments without running out of money (which means he would have to
close his restaurant). He wants to know what his options are.
Case 7: Henry & Ivan v Ken - owner of KCC
Henry and Ivan entered KCC on a Monday for lunch. The ordered their lunch and on the
back of the receipt was printed “KCC accepts no responsibility for any losses, including
personal injury, occurring while on KCC property.” A customer had spilled a drink but the
employees were too busy to notice it. Henry and Ivan both slipped in the liquid, hitting
their heads, and losing consciousness. While they were out, someone stole smartphones
from both Henry and Ivan. Each phone costs ₤500 to replace and the hospital bills after the
accident totalled ₤1,000 for both of them. Henry and Ivan expect KCC to pay for all
₤2,000 but Ken showed them the disclaimer on the back of their receipt. Henry and Ivan
are planning to sue KCC but Ken thinks they will lose because he has protected himself.
Case 8: Ken-owner of KCC v Jelly Bean Rentals
Ken would like advice on is about a new stove he leased. This stove allowed KCC to
increase their productivity because they could cook more meals at the same time, reducing
customer wait time. The terms of the lease were that KCC would pay Jelly Bean Rentals
₤200 per month for 18 months and Jelly Bean Rentals would ensure that the stove worked
correctly during the length of the lease. After six months, the timer on the stove, which
helped the cooks make sure they did not overcook any meals, broke. Ken called Jelly Bean
Rentals and told them to come and fix it. Jelly Bean Rentals offered excuse after excuse
and, in the end; it took them 3 months before they came to fix the timer. By this time Ken
was angry and wanted to break the contract. He insisted to the manager, who came with
the repairman to fix the broken timer, that KCC would not make any more payments on
the stove and that Jelly Bean Rentals should disconnect the stove and take it back
according to the terms of the agreement. The manager refused saying they contract would
stay in force. Ken has not made any further payments and 4 more months have passed. The

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contract stated that if Ken failed to make 2 or more payments on time then the monthly
payment for all future payments would double to ₤400 per month. Ken believes he does
not owe any payments (and he didn’t make any late payments before he cancelled the
contract) to Jelly Bean Rental since he told the manager to his face that he wanted to
cancel the contract.
Case 9: KCC v KCC’s customer
KCC has an issue with a customer who ordered 1,000 hotdogs last month for a party. KCC
delivered the hotdogs but did not deliver any condiments (mustard, ketchup, etc.). The
customer was expecting there to be condiments and when there weren’t any, the customer
had to send someone out to buy ketchup and mustard. The customer now wants the money
back for the condiments but Ken says that condiments were not included in the contract
although he does offer then for free in his restaurant. The cost of the condiments was ₤100.

Anon, 2013. Formation of a contract. [Online]
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